Measuring Rank-Based Utility in Contests: The Effect of Disclosure Schemes

Hossain, T, Shi, M and Waiser, R (2019) Measuring Rank-Based Utility in Contests: The Effect of Disclosure Schemes. Journal of Marketing Research, 56 (6). pp. 981-994. ISSN 0022-2437

Abstract

This paper studies how the incentive structures and disclosing schemes of a contest affect the contestants’ intrinsic motivations. Specifically, we measure the effects of these design decisions on two types of non-monetary rank-based utility: self-generated and peer-induced. We run a set of laboratory experiments involving contests under various reward spreads and disclosure schemes. We find that virtually all commonly adopted disclosure schemes generate positive peer-induced rank-based utility. However, the relative performances of alternative disclosure schemes can depend on the spread of contest rewards and the number of contestants. Second, being recognized as a winner confers positive peer-induced rank-based utility; moreover, being recognized as the sole first-place winner or as one among multiple winners does not produce significantly different peer-induced utility. Third, ‘shaming’ by disclosing the identity of contestants ranked at the bottom leads to negative peer-induced rank-based utility, but the effect is marginally insignificant. Finally, a smaller spread of contest rewards consistently results in higher levels of self-generated rank-based utility. These results underscore the importance of jointly choosing incentive structures and disclosure schemes.